Noonan finally admits: We can't predict Brexit hit on Ireland
Published 01/07/2016 | 02:30
The situation is "evolving". It is "hard to get a fix on". In fact there is no way of telling just how bad it's going to be. It could work out to our advantage, but it's just as likely to slide into the realm of "serious".
It wasn't exactly a moment of divine clarity - but Finance Minister Michael Noonan finally told us to be prepared for the worst and hope for the best.
This day last week, the world woke up to the news that Britain had pressed the nuclear button and opted out of the European Union (EU).
Hardly any global leaders wanted such an outcome from an ill-judged referendum, least of all Taoiseach Enda Kenny.
But he tried to play down the impact, telling us time and again in the hours and days since that everything is in hand.
We'd plead with Europe for 'special' status, seek to retain the Common Travel Area and highlight the damage a return of border controls between the Republic and Northern Ireland could have.
But there would be no impact on next year's Budget and ministers repeatedly told us to find comfort in a single page of the Summer Economic Statement, which suggested the ultimate cost to the Irish economy would be €3bn between 2018 and 2019.
But appearing before an Oireachtas committee yesterday, Mr Noonan gave a more honest assessment.
Without any sense of scaremongering, he admitted that the figures set out in the economic statement would ultimately have to change.
The minister explained that if Britain had voted to stay in the EU that change would have been positive, but now the impact of Brexit puts things in doubt.
He admitted it is impossible to prepare for the full effects until a new British government is in place and an exit deal is agreed with the EU.
"If the arrangement is full access to [the] single market and free movement of goods and people then the impact will be quite low, maybe even to our advantage.
"If there is difficulty reaching a deal on it and it reverts to some World Trade Organisation relationship, where the UK is treated as an economic unit outside of the European Union without any specific bilateral deal, then you're into tariffs and border posts and all sorts of inhibitions to trade.
"So the impact will be bigger. It's impossible to forecast with any accuracy what impact that would be, but it would be serious.
"There's no doubt about that," he said.
Worryingly, Mr Noonan signalled his belief that it will be difficult for Britain to secure continued access to the free market - because that would have to coincide with the free movement of people, which was a "crunch" issue during the referendum debate.
Around the same time that Mr Noonan was speaking in Dublin, the Slovak finance minister Peter Kazimír was telling reporters that the next few months and years will be "no fun" for his Irish counterpart.
"I can imagine for Michael Noonan this is going to be a problem," said Mr Kazimír, whose country is taking over the EU's rotating presidency today. "It is n ot fun for countries in this corner of Europe."
However, Mr Noonan said that for now we should remain calm and closely monitor developments.
He rejected a call from Fianna Fáil's finance spokesman Michael McGrath for the Summer Economic Statement, which was released two days before polling, to be revised.
"There will be some changes anyway. We expected before the Brexit that the changes will be positive.
"But when you think about the tax that will come in on corporation tax, the [earnings] have already taken place. The tax that will come in on income tax, we don't foresee a decline in employment between now and the end of the year," he said, adding: "The tax streams for October and 2017 are relatively fixed at this stage."
Mr Noonan went on to confirm that he is likely to delay the planned sale of a 25pc stake in AIB because of market volatility.
The Government had intended to reduce its shareholding in the bank in the latter half of this year but is now likely to hold off until the first half of 2017.
In relation to the 14pc stake in Bank of Ireland, Mr Noonan said it would be sold "in due course when we can get the best price possible" but there is "no pressure" to rush the sale.
On a positive note he said the Government would be looking to exploit the Brexit result where possible, particularly in the area of foreign direct investment.
He said the markets' response since the vote had been "adverse to the UK in terms of their exchange rate and stock exchange values".
"The international expectation is that the UK will be a less strong economy than it was before the Brexit," he said, adding that that would be an "advantage towards Ireland" but that it was not possible to quantify any possible gains yet.
So now we know. The Government is working in a vacuum, crossing a bridge into the unknown and hoping for a good hop of the ball.
And whatever the outcome we are sticking with the EU no matter what.
In the Dáil, Fianna Fáil's public expenditure spokesman Dara Calleary said Europe had "walked away" from Ireland during the financial crash. He speculated that a referendum on EU membership might not pass in Ireland, adding that they had "rammed an austerity programme" into Ireland and Greece in an attempt to re-engineer society.
But at the committee hearing, Taoiseach Enda Kenny said that even if other countries come after our corporation tax - we are in for the long haul.
He was asked if he agrees with views expressed by the Government chief whip and a Fine Gael MEP in recent days that if Europe forced further tax harmonisation, Ireland should follow Britain out of the union.
The Taoiseach replied: "Certainly not. Corporate tax and tax is a matter of national competency. It is protected by the European Union's treaties. We will not be leaving the European Union on it."
As was so often said during the days of the economic crash: We are where we are.